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A massive amount of economic data has hit the tape in today’s pre-market. Retail Sales, Import and Export Prices, Empire State and Philly Fed manufacturing surveys and the normal Weekly Jobless Claims all uniformly sounded the bell that the economy remains strong, and the labor market has not yet fallen off the table.
Pre-market indexes leapt at this news: the Dow went from +135 points to +255 a minute later, the S&P 500 moved up from +10 to +30, and the Nasdaq from +45 points to +125. I guess the lesson of the morning is that good news is now good news.
Retail Sales Post Biggest Gain in More Than 2 Years
Market participants have been looking for signs of consumer weakness, and in some places have found it. But not here. A July Retail Sales headline of +1.0% is the strongest monthly print since April of 2022, 70 basis points (bps) above expectations and even higher than the downwardly revised -0.2% in June. Subtracting auto sales, this reduces to +0.4% — still above projections. Ex-autos and gas was also +0.4%, and the Control number is a still-healthy +0.3%.
Year over year, a +2.7% gain in Retail Sales is the highest read since April of this year. This is above the mean average year to date, and another sign that perhaps the economy is not shrinking as fast as many analysts had been expecting.
Imports and Exports Higher than Estimates
July Import Prices were expected flat from the previous month’s 0.0%, but ticked up to +0.1%, again the highest print since April. Ex-petrol (fuel imports), we match the +0.2% reported for June. These figures, while also above expectations, are generally in-line with previous forecasts.
Export Prices, on the other hand, jumped to +0.7% for July, 100 bps higher than the June read of -0.3% and much loftier than the 0.0% analysts had been expecting. Again, the comps go back to April, which was also +0.7%. Year over year, +1.4% was far above the +0.1% analysts had been looking for.
Jobless Claims Tick Down Slightly
While we remain in a higher tier on jobless claims from earlier this year and late 2023, on both new and longer-term claims we are down somewhat from a week ago. This may look fairly inconsequential, but considering how many eyeballs were waiting to see a labor market beginning to fall apart, they can blink a sigh of relief this morning.
Initial Jobless Claims came in at 227K, down from the slightly upwardly revised 234K from a week ago and the 235K anticipated. Continuing Claims reduced to 1.86 million, slightly below the downwardly revised 1.87 million reported a week ago, which remains the highest weekly print for longer-term unemployment since November of 2021.
Empire State, Philly Fed Post Single-Digit Negatives
Two major regional manufacturing surveys — Empire State (New York) and Philly Fed (municipal Philadelphia) — had been going in opposite directions for most of 2024, but for today’s August release, they’re pretty closely aligned. Empire State has now posted its ninth straight negative month, but at a better-than-expected -4.7 (also an improvement from the unrevised -6.6 from the previous month). Philly Fed had enjoyed six straight positive months, but for August drops to -7, well below the +7.9 analysts were looking for.
Walmart Demonstrates a Strong (Bargain) Consumer
The biggest of the biggest discount retailers, Walmart ((WMT - Free Report) , posted its thirds earnings beat in its past four quarters this morning, with Q2 coming in at 67 cents per share — slightly above the 65 cents in the Zacks consensus, and six cents higher year over year. Walmart kept its revenue outperformance streak intact, with an eye-popping $169.34 billion in sales outpacing estimates by +0.5%.
Further, Walmart raised guidance for the full year, suggesting more good news to come. But when a major discount retailer posts a strong quarter, it always begs the question whether it is pulling business away from higher-priced retailers. Based on what we’ve seen from other big box stores. the answer at this time would be “yes.” Consumers are fighting inflation themselves by opting for lower-priced goods.
Walmart shares are up +8% in today’s pre-market, adding to the stock’s +30% gains year to date. It’s also leading the blue-chip Dow index higher this morning, on what’s shaping up to be an explosive open.
In Summary
These data points strongly suggest the appetite of the American consumer — and its overall economy — is better than market participants had reckoned as recently as last week. While we do see retail prices coming down and the labor market loosening somewhat, we appear far from recessionary trends from this vista.
It is likely this notion which is rallying indexes in today’s pre-market: the Dow +415 points, the S&P 500 +50 and the Nasdaq +225 points ahead of the opening bell. That said, what may not be currently considered in that expected 50 bps cut from the Fed next month might be cut in half to a more modest 25 bps.
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Retail Sales Increased More Than Expected
A massive amount of economic data has hit the tape in today’s pre-market. Retail Sales, Import and Export Prices, Empire State and Philly Fed manufacturing surveys and the normal Weekly Jobless Claims all uniformly sounded the bell that the economy remains strong, and the labor market has not yet fallen off the table.
Pre-market indexes leapt at this news: the Dow went from +135 points to +255 a minute later, the S&P 500 moved up from +10 to +30, and the Nasdaq from +45 points to +125. I guess the lesson of the morning is that good news is now good news.
Retail Sales Post Biggest Gain in More Than 2 Years
Market participants have been looking for signs of consumer weakness, and in some places have found it. But not here. A July Retail Sales headline of +1.0% is the strongest monthly print since April of 2022, 70 basis points (bps) above expectations and even higher than the downwardly revised -0.2% in June. Subtracting auto sales, this reduces to +0.4% — still above projections. Ex-autos and gas was also +0.4%, and the Control number is a still-healthy +0.3%.
Year over year, a +2.7% gain in Retail Sales is the highest read since April of this year. This is above the mean average year to date, and another sign that perhaps the economy is not shrinking as fast as many analysts had been expecting.
Imports and Exports Higher than Estimates
July Import Prices were expected flat from the previous month’s 0.0%, but ticked up to +0.1%, again the highest print since April. Ex-petrol (fuel imports), we match the +0.2% reported for June. These figures, while also above expectations, are generally in-line with previous forecasts.
Export Prices, on the other hand, jumped to +0.7% for July, 100 bps higher than the June read of -0.3% and much loftier than the 0.0% analysts had been expecting. Again, the comps go back to April, which was also +0.7%. Year over year, +1.4% was far above the +0.1% analysts had been looking for.
Jobless Claims Tick Down Slightly
While we remain in a higher tier on jobless claims from earlier this year and late 2023, on both new and longer-term claims we are down somewhat from a week ago. This may look fairly inconsequential, but considering how many eyeballs were waiting to see a labor market beginning to fall apart, they can blink a sigh of relief this morning.
Initial Jobless Claims came in at 227K, down from the slightly upwardly revised 234K from a week ago and the 235K anticipated. Continuing Claims reduced to 1.86 million, slightly below the downwardly revised 1.87 million reported a week ago, which remains the highest weekly print for longer-term unemployment since November of 2021.
Empire State, Philly Fed Post Single-Digit Negatives
Two major regional manufacturing surveys — Empire State (New York) and Philly Fed (municipal Philadelphia) — had been going in opposite directions for most of 2024, but for today’s August release, they’re pretty closely aligned. Empire State has now posted its ninth straight negative month, but at a better-than-expected -4.7 (also an improvement from the unrevised -6.6 from the previous month). Philly Fed had enjoyed six straight positive months, but for August drops to -7, well below the +7.9 analysts were looking for.
Walmart Demonstrates a Strong (Bargain) Consumer
The biggest of the biggest discount retailers, Walmart ((WMT - Free Report) , posted its thirds earnings beat in its past four quarters this morning, with Q2 coming in at 67 cents per share — slightly above the 65 cents in the Zacks consensus, and six cents higher year over year. Walmart kept its revenue outperformance streak intact, with an eye-popping $169.34 billion in sales outpacing estimates by +0.5%.
Further, Walmart raised guidance for the full year, suggesting more good news to come. But when a major discount retailer posts a strong quarter, it always begs the question whether it is pulling business away from higher-priced retailers. Based on what we’ve seen from other big box stores. the answer at this time would be “yes.” Consumers are fighting inflation themselves by opting for lower-priced goods.
Walmart shares are up +8% in today’s pre-market, adding to the stock’s +30% gains year to date. It’s also leading the blue-chip Dow index higher this morning, on what’s shaping up to be an explosive open.
In Summary
These data points strongly suggest the appetite of the American consumer — and its overall economy — is better than market participants had reckoned as recently as last week. While we do see retail prices coming down and the labor market loosening somewhat, we appear far from recessionary trends from this vista.
It is likely this notion which is rallying indexes in today’s pre-market: the Dow +415 points, the S&P 500 +50 and the Nasdaq +225 points ahead of the opening bell. That said, what may not be currently considered in that expected 50 bps cut from the Fed next month might be cut in half to a more modest 25 bps.